If you are new to Nigeria's real estate industry, there are important terms that you should know. It is important to understand these terms to appreciate the legal options that are available before each decision. You will learn to make better investment decisions where real estate is involved.
Here are the top 10 Nigerian real estate terms for you:
Land Use Act
The first Nigeria real estate term you should know is the Land Use Act. This term is not the most used or popular, however, it is the most important. The Land Use Act is part of Nigerian law that governs the use of land in the country. It contains some important details everyone should know.
As per the Land Use Act, all land in the country is under the control of the state government. The state is involved in the management and allocation of the lands. According to the act, individuals are allowed to use and develop it for only up to 99 years.
The Land Use Act serves as a guideline for both land owners and users. It also highlights the processes involved in land registration and verification. It makes it easy for individuals and bodies to own lands.
Deeds of Assignment
This term refers to the documents that prove the details of a transaction between a new buyer and the current title holder. It serves as evidence that the right to ownership of the land has transferred from one entity to the other.
Note that only a lawyer can prepare this document based on Nigerian laws. The provision represents a buyer’s interest, the seller also drafts his side deeds of assignment. Then both parties come together under the supervision of a trusted real estate agency like Land Republic.
Land Republic joins the top 50 real estate companies in Nigeria amongst Sonji Motors and two more big names. They can help finalize these documents and make them binding for both parties.
Certificate of Occupancy
Certificate of Occupancy (C of O) is another term that is important when discussing land registration in Nigeria. It is a legal document issued by the government to serve as proof that a person owns land in Nigeria. Without the document, the Government reserves the right to seize any property or plot of land from an individual or organization.
The certificate serves as proof not just for the government but for other bodies involved in land development. Please note this term is slightly different from Right of Occupancy (R of O). The latter is a mere right and less formal. It is a sort of permit that allows one to use the land, but it is not enough for legal transactions.
Mortgage
Mortgage is another Nigeria real estate term for buyers or newly interested investors. A mortgage is a legal agreement between a buyer and a bank to buy real estate properties. A mortgage is a loan unit specifically for buildings. In Nigeria, there is a standard rate between 17% and 25%.
Also, note that some specialized financial institutions also provide a mortgage. The property itself serves as collateral for the loan. Interestingly, some mortgage plans are not for purchases but for property improvement.
Appraisal
Appraisal as a real estate term will only make sense when you understand mortgage. Appraisal is a process of home evaluation to estimate the value of a property. A lot of factors contribute to the appraisal figure at the end of the process. Some of these factors include the following:
- Comparable sales in the area
- Condition of the property
- Age of the Property
- Features in the Property
Property Listing
A listing is a popular term used by real estate agents or companies to itemize the properties available for sale by the agency. The terms originate from the idea that these properties are provided as a list on websites, flyers, or real estate publications.
The listing gives you a look at all the available properties for sale. It also provides basic information such as price, location, and size in terms of square foot. The interior details such as several bedrooms, living rooms, and restrooms are also mentioned on the property listing. Here are the different types of property listings based:
- Open Property Listing
- Exclusive Property Listing
- Exclusive Right-To-Sell Property Listing
Inspection
Inspection or property inspection is another term to keep in mind if you are interested in the real industry. Inspection is especially important for a buyer. It is a check of property that happens after you, as a buyer, have made an offer on a home. Some deals require compulsory inspection while some do not. However, it is a real estate term you should know.
Inspection allows you to check and understand the state of the real estate property before committing to a deal. An inspector is always present to check major units such as foundations, walls, plumbing, electricity, and others. Failure to properly inspect the property can expose you to unplanned and expensive repair costs.
If you are applying for a mortgage, it is often required to get a professional opinion on the fair price of the product. You can also employ the services of a valuer before making personal purchases. Note that both parties are entitled to give an appraisal.
Realtor
A realtor also called an estate surveyor a professional licensed to give and provide sound advice and services on real estate matters. These include advice on where to buy land, the right investment path, and lots more. A realtor serves as a representative between sellers and buyers in transactions.
Basically, it is a term for a real estate agent. But there is a slight difference. For a real estate agent to qualify as a Realtor, they must be a member of the National Association of Realtors (NAR). They operate within certain codes and standards. The NAR, a central body in Nigeria governs the actions and ethics of operation of the real estate agents.
Capital Gain Tax
The term represents the tax level when a sale of property occurs. The tax is imposed on the profit made from a sale or transfer of real estate property. This often comes into play when the property in discussion has appreciated over time.
According to Nigerian land regulations, 10% is the capital gain tax on real estate for individuals. The figures increase to 20% for companies.
Capital gain tax calculation takes appreciation and inflation into account and it’s usually paid by the property seller. However, note that some exemptions to this tax payment exist.
Appreciation
It is important to get familiar with the term Appreciation when discussing other terms like capital gain tax. Appreciation simply refers to the increase in the fair value of a property over time. When we say a property appreciates, it means that the value has increased. The underlying factors for appreciation include the following;
- Demand for type of property
- Location of the property
- Economic conditions
- Property Upgrade and Repairs
Final Words
Familiarity with common terms in Nigeria’s real estate industry will give you a smooth experience as you journey into this world. Top-rated real estate agents like Land Republic can also help with practical advice and services. The goal of digitizing the real estate sector makes it easier for new investors or buyers to make informed choices.
